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ConAgra shifts its emphasis to brand-building

The launch this week of an $8 million TV campaign for Hebrew National is just one of ConAgra Foods' initiatives in its journey to become a brand marketer vs. a commodity broker. The effort, from Grey Global Group's Grey Worldwide, New York, is part of a roughly 50% increase in marketing spending for the hot dog brand that, like its owner, is relatively small but primed for growth.

With the sale of its fresh beef and pork businesses said to be imminent, and a more brand-focused management team in place, Con- Agra will concentrate its efforts over the next year on building its roster of convenient meals under the Hebrew National, Armour and Butterball banners, among others. Another area of focus will be in snacks, with new products such as Hunt's Snack Packs Squeez `n Go shelf-stable pudding in a tube.

The initiatives follow a number of new-product successes this past year where ConAgra made dents in categories long dominated by large-scale competitors. The introduction of Banquet Homestyle Bakes shelf-stable dinner kits with meat has been a home run-sales reached $102 million for the 52 weeks ended April 21, largely at the expense of General Mills' meatless Betty Crocker Helper line, which remained flat for the time period at $355 million, according to Information Resources Inc. And the Jolly Rancher Gel Snacks ConAgra introduced (now a $28 million business) prompted gelatin giant Kraft Foods to respond with a knock-off, Jell-O Extreme.

"After a number of difficult years, [ConAgra] is starting to get some traction in brand development ... although it still has a long way to go," said Prudential Securities analyst John McMillin.

Roughly 75% of the company's profits come from its Packaged Foods business, although more than half its revenue still comes from commodity businesses. Packaged Foods' sales grew 3%to $3 billion in the quarter ended Feb. 24, while the division's profits rose 23% to $426 million.

To get to this point, Chairman-CEO Bruce Rohde has spent the last three years replacing 55% of the company's top 300 managers with more brand-savvy executives, according to a company spokesman. Last July, Mr. Rohde brought in former Campbell Soup Co. executive Marty Thrasher as president-chief operating officer of the Retail Products Co.

"ConAgra has taken some of their brands for granted, and we need to revitalize and reinvigorate them," Mr. Thrasher said. Although Taylor Nelson Sofres' CMR shows ConAgra's ad spending fell 17% last year to $134.5 million, he said ad spending will rise double-digits over the next year as will other marketing efforts. He cited work bowing this fall to support priority brands including Reddi Whip, Healthy Choice, Banquet, Hunt's, Chef Boyardee and Orville Redenbacher.

But even with planned increases, ConAgra's marketing spending pales in comparison with some competitors: Kraft Foods, for example, spent $763 million on advertising last year, according to CMR.

need-based spending

Mr. Thrasher said that while the company does have "significant ad spending on many of our brands," in some cases, such as with the new Hershey-branded portable pudding, there is no need. "Finding marketers that know how to spend money-they're a dime a dozen. ... Marketers that know how to make money are diamonds in the rough," he said.

Steve Silk, president of Con-Agra's Refrigerated Foods Group, seems to be just that. Under his watch, Hebrew National-regional until just three years ago-has become the fastest-growing hot dog, outpacing the category by more than four times. Sales grew 13.2% to $66 million for the 52 weeks ended April 21, according to IRI.